Brewer faces tough fight expanding Medicaid

PHOENIX — Republican Gov. Jan Brewer faces one of the toughest fights of her political career as she bucks her own party in an effort to expand Medicaid to about 300,000 more poor people in her state under President Barack Obama's health care overhaul.

Brewer had been one of the most hard-line opponents of the federal law, and her decision to comply — and raise what critics say amounts to new tax to pay for it — has turned allies into foes. There is even talk of lawsuits to stop her.

"It's going to be a very big hurdle," said Rep. Carl Seel, R-Phoenix, a tea party conservative who is pushing a bill to block Brewer's plans.

"I think the Republican Party is, by and large, opposed to it," he said.

There is some GOP support, but even the House Speaker and Senate President, both Republicans, are wary of how the system would be set up to prevent costs for the state.

And in a strange twist, Democrats are supporting the governor after years of sparring with her at every turn.

Brewer previously joined several other Republican-led states in a legal challenge that failed last year before the U.S. Supreme Court to have the law turned back as unconstitutional. Republicans called the health care law a federal takeover and opposed it as a step toward socialized medicine.

The nation's highest court upheld the law's key components but gave states the option of maintaining their Medicaid programs without expansion — an out clause of sorts that most expected Brewer to embrace. That gave her the option of rejecting an expansion of the program just as she had rejected establishing a state-run health care exchange.

But Brewer, in announcing her decision to expand the Medicaid program during her State of the state address last month, said despite her opposition to the law, turning down the expansion would hurt Arizona.

She said as many as 300,000 low-income residents could gain insurance, and more importantly, hospitals would see less uncompensated care because about $2 billion in extra federal money would flow into the state. In addition, average Arizonans who have health insurance end up paying higher premiums to cover the uninsured, so pressure on those premiums should go down.

Brewer's proposed legislation to expand Medicaid has yet to be released. Lawmakers say they don't know exactly how she'll craft the proposal, but some conservatives in her own party are vowing a bitter fight.

The biggest battle will take shape over new fees imposed on hospitals, expected to pay for the state's initial $154 million-per-year expansion costs and result in much more federal money coming back to the state under Obama's health care law.

Brewer isn't calling it a tax, but an assessment — a key distinction because a voter-approved state law requires a two-thirds vote of both chambers of the Legislature to pass tax increases.

For hospitals stuck with millions of dollars in uncompensated care each year, agreeing to be taxed makes sense. They would pay 6 percent of their revenues and get a much larger amount back from Medicaid from the newly insured.

Conservative Republicans in the House say that regardless of how the governor phrases it, Brewer is raising a new tax. They say they'll fight efforts to pass any version of an expansion.

An economist with the Goldwater Institute, a libertarian think tank that opposes the expansion, acknowledged that Brewer may be able to push the assessment through, although they won't absolutely rule out a lawsuit.

"In this case there are just some weird issues as to what constitutes a tax," said Goldwater's Byron Schlomach. "But to me and I think a vast majority of people with any sense, it definitely walks and talks like a tax. But what's obviously to us isn't always obvious to the courts, like in the last Obamacare decision."

There is also concern from some hospitals and clinics that don't treat as many patients without health insurance, like the Mayo Clinic in Scottsdale and some smaller hospitals in rural areas. Rep. David Stevens, R-Sierra Vista, said some clinics in his district are very concerned.

"It will not work. I spent last night with some community health care people from my district and they want exemptions out of that," Stevens said last week. "I tell them, the reason we got this so early in the year is that it's not a done deal. I would venture to say that most of my compadres are not in support of this."

Brewer, however, isn't standing alone. Her supporters include Rep. Heather Carter, R-Cave Creek, who heads the House health committee. She said negotiations are ongoing as to what the legislation will look like.

"This is probably one of the most historic moments in Arizona's history in the last 20 years that any of us have seen related to health care," Carter said.

Carter said supporters need to make sure Arizonans understand the consequences of refusing the expansion. The end result, she said, could be the federal government pulling all funding for some parts of Medicaid if the program doesn't go ahead with the expansion.

She said it's now time for details of the bill Brewer wants the Legislature to debate to be released.

Brewer followed her Jan. 14 announcement with a full-court press to sell the idea, holding press conferences across the state with hospital administrators who support the expansion and the assessment on their revenues. She also lined up support from the business community and the Board of Regents, powerful interests that could sway many legislators with cold feet.

Brewer has the support of Democrats in both chambers, but could lose some as whatever bill she introduces is amended to draw Republican support. Lawmakers are talking about lawsuit reform, tougher audits and even some tax cuts as possible tack-ons that could drive away Democratic support.

"Will people try to add things on and take things off? I'm sure that's going to be part of the process," Carter said. "And the sooner we have that language the sooner that process can start, which means the sooner we can get to either a 'go forth' or 'we're not going.'"